Management Accounting Report: N&C Building Products Analysis

This report provides a comprehensive overview of management accounting principles and their application within N&C Building Products. It begins with an introduction to management accounting and its importance, followed by an explanation of different management accounting systems such as cost accounting and inventory management. The report then details various types of management accounting reports, including budgeted reports, balance sheets, and cost accounting reports. It further explores the advantages and disadvantages of different planning tools for budgetary systems, specifically operating and financial budgets. The report also addresses how companies can respond to financial problems to achieve sustainable success, incorporating practical examples and analysis. The content includes PPT slides and references, offering a detailed insight into financial strategies and operational efficiency within a manufacturing environment.

Management Accounting

Table of Contents
INTRODUCTION...........................................................................................................................1
1. Explanation of management accounting and the essential requirement of different type of
management accounting system..................................................................................................1
2. Explaining different type of management accounting reporting.............................................3
3. Enclosed in PPT......................................................................................................................5
4. Explaining the advantage and disadvantage of different planning tools for budgetary
system..........................................................................................................................................5
5. Different management accounting techniques used by companies in order to respond to the
financial problems and leads to sustainable success. .................................................................8
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Management accounting is very crucial for efficient operation and function of a business
enterprises. MA is essential in order to traces the financial as well as non-financial information
regarding various activities of business organisation. Management accounting is consider to
present the accounting information of the business to the management in a manner which assist
them in making essential policies and decisions regarding regular business operations. The
present report which assist in getting a deep insight to the various aspects of management
accounting in N&C Building product, a manufacturing company based in UK. As an assistant
accountant on company, the present report will listed the importance of different management
accounting system. It will also highlight the various managerial accounting reports and its
integration in organisation. Further, presentation will be made which will demonstrate the
calculation on income statement with different management accounting techniques. Moreover,
the report will evaluate different planning tools of budgetary control and its application for
preparing and forecasting budgets. Furthermore, report will compare the ways through which
organisation can respond to its financial problem and leads to sustainable success.
1. Explanation of management accounting and the essential requirement of different type of
management accounting system.
In today's competitive business world, accounting is said to be an important tool in order
to proficiently analyse the business activities and its operations. Management of company in
need to effectively adopt the management accounting which assist the internal managers to
facilitate their decision making process. Thus MA can be defines as an operation of applying the
skills and knowledge in order to prepare accounting information of company in a way which
would stimulate the management of N&S Building Products Limited in the process of
formulating policies and strategies for the growth and success of organisation.
Management Accounting is essential in organisation as it assist all department and
functional area to report their operational activities information to top-executives (Holopainen,
Niskanen and Rissanen, 2019.). These information will help in making decision making
regarding various departments and their operations more effectively. The different management
accounting system that can be effectively apply in company are as follows:
Cost accounting system:
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This system is used in order to track and record the activities of manufacturing of a
product. Cost accounting effective for the manufacturers which assist them, in order to tracks the
flow of inventory throughout the process of production. It is every essential in order to analyse
the profitability of a product (What is a Cost Accounting System? , 2019). To assist the managers
to estimate the correct cost of the product. It can be effectively integrated in N&C limited in
order to track the cost of raw material and the manufacturing cost of the final product. There are
two main types of cost accounting system:
Job order costing: It is a cost accounting system which assist in a assembles all the
manufacturing cost to each job or task separately.
Process costing system: It includes the accumulation of cost of each operation, activity,
process and departments. It is appropriate of the N&S Ltd as there are various departnmenst6 and
functions includes in the process of production.
Advantage Disadvantage
 It assist in eliminating waste, losses and
inefficiency.
 It assist in identifying and determining
the reason of profit and loss which
increase efficiency
 Cost of the manufacturing keeps on
changing which leads to increase the
inaccuracy.
 It depends on the past performance and
does not considered the future
contingencies.
Inventory management system: is an essential managerial system which assist a manager to
track and keep record of the flow of goods in a company. It is vital in order to track the flow of
goods throughout its supply chain in an organisation. It is a complex system, which needs to
track the minute details of each new and returned products in warehouses or at the point of sales.
It assist the management in order to take decisions regarding supply chain of the company. It can
be better apply in N&B limited through different inventory management software, which assist
in tracking and keep details of all the products throughout various stages (Hwang, Lin and Shin,
2018). The inventory management system considered vital as the inventory are the core asset for
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an organisation. There are different methods in order to evaluate the inventory management,
some of them are:
FIFO: In this method, the inventory that are manufactures first will be taken out for the
selling purpose first. It is an effective method which assist in ensuring that oldest produced stock
will be taken out for sales first. It occurs due to the fluctuation in the economy and risk of fall in
the price of the product in market.
LIFO: In this method, the product that are manufactured recently will be shipped or
taken out for thee selling purpose first. This method is used with an assumption that prices of a
certain product will raise with time in market.
Advantage Disadvantage
 It is effectively provide information of
the over-stock and under-stock which
assist in lowering the cost.
 It leads to raise in efficiency of the
operating performance.
 The implementation of inventory
management system requires huge
investment.
 The system in very complex to
understand and it time consuming
process.
Price Optimization system: this accounting method is very essential as it assist the manager in
order to control the price of the available resources in the organisation (Booth, 2018). This
system assist the managers to efficiently decide the prices of various products at a time. This
system proficiently analyse the expected changes in demand of the product in a market with
changing in the price of product. It assist the N&S limited to determine the pricing strategy
which assist in maintain a stable demand in market and will cover all the manufacturing cost of
the product.
2. Explaining different type of management accounting reporting.
Managerial accounting reports is the financial and statistical information of various
departmental operations to the management of the organisation. It helps in providing the
management a deep insight of the overall performance of the business organisation. Such reports
are crucial in order to take decisions, make planning ad strategies and in measuring the
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performance level of overall organisation (Malina, 2018). N&B limited generated such reports
with the help of several information from the department throughout the accounting period as per
the requirement. There are various form of management accounting report which plays a crucial
roles in making many critical decisions regarding the business growth and success.
Budgeted report:
This is considered as the fundamental report for any business organisation which critical
in measuring company's performance. Such reports are being prepared every year for the purpose
of various activities' earning and expenses. Such reports are based on the previous year's
performance and make strategies in order to achieve its goals and mission as per the budgeted
plan. It is an useful report for the manager in order to analyse the performance of the company in
compared top the prior year (Monden, 2018). This help the manager to control the access or
unnecessary expenses of various operation in order to enhance the performance of the business
enterprise.
Account receivable ageing report:
This reports is generally prepared in the company which are providing credit facilities to
their clients and distributors. The accountant prepares the account receivable accounts for
transaction in N&C that occurs ion credit. At the end of financial year or whenever required,
manager prepared accounts receivable ageing report which assist in identifying the current
defaulter. With the help also assist the manager in order to take decision for tightening the cash
collection process. This report is essential for the manager in order to have a strong credit policy
in company. Accounts receivable ageing report is essentially required in N&C limited in order
to maintain proper cash flow in business operations.
Balance Sheet:
Balance sheet is often termed as the statement of financial position, as it estimate the total
asset and total liabilities of a company is a particular accounting period. Through it is prepared
for the external users of company like investors, shareholder. But is also required by to-level
management in order to estimate and evaluate the complete picture of company's financial
performance and current position. It assist the management to analyse the financial position in
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compared to the last year's performance (Christensen, 2018). It is essential for N&C limited as it
helps the management to make policies and strategies for their future operations.
Cost accounting report:
All the cost of the raw-material, direct and indirect expenses cost that are incurred in the
manufacturing process of a product are summarized in the cost accounting report. This reports
are very essential as it assist the manager to determine the cost of the manufacturing as it crucial
in determining the selling cost of the product. Manager can analyse the profit margin that can be
gained from selling cost of product (Kenichi and Bruce, 2018). With the help of this report,
management can also identifying the over expenditure in the manufacturing process and can take
decisions in order to control the expenses of manufacturing process. Cost accounting report will
assist the management in understanding the efficient utilization of resources and eliminating the
unnecessary expenses.
3. Enclosed in PPT
4. Explaining the advantage and disadvantage of different planning tools for budgetary system.
Budgetary control can be termed as the process which involved in evaluating and
determining various actual results of the company's performance as compared to the budgeted
performance. After evaluation of budget performance with the actual performance, management
can assist in calculating the variances. Budgetary control process assist the management in order
top control the excess expenses and operations which creates the differences in actual
performance of business operations. Planning tools of the budgetary control is the way through
which manager can control and estimate the performance of N&C limited as p[er the budget
prepared. The advantage and disadvantage of different planning tools are as follows:
Operating Budgets: This budgets can be termed as the operational anticipation plan of
the organisation's future operations. Such budgets assist in focusing the income from the daily
operations and sales of the product of N&C limited (Ward and Calabrese, 2018). Operational
budget will assist the manager in determining the future financial position of the company and
expected profit earned with a specific time period. With the help of operating budget, manager
can make effective decision in order to increase the revenue and cut the operational cost in order
to maximize the overall operational profit.
Advantage of operational budget:
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 Operational budget assist in allocating the short-term funds to different operational
activity.
 It helps in predicting the short-term requirement and managing the expenses in order to
meet the long-term goals of the organisation (Pros & Cons of an Operational Budget ,
2019).
 Operating Budgets serves as an essential tool for the managers to effectively reserve the
financial resources of the company in order to meet the future requirement of the
operations.
Disadvantage of operational budget: With the change the financial budget, operating budget also needs to be changes in order
to includes the new figures as it can leads to make the budget complicated and inaccurate.
Financial Budget: It is one of the most important planning tool in order to control and
determine all the sources of income and expenditure of the company in a particular period. There
are different sources of revenue and expenses for the company (Maskell, Baggaley and Grasso,
2016). Sources of revenue for the company are sales revenue, cash from selling asst, loans etc.
The main source of expenses are purchasing of new equipments, paying debts of the company
etc. this budgets assist the managers n controlling the expenses and increasing the revenue for the
company. There are many sub-category of the financial budgets such as:
Cash budget: It is the anticipated plan fort the future cash receipts and expenses of the company
as compared to the previous years expenses and receipts. This budgets assist the management in
providing the information in order to control the cash flow in order to meet the current
requirement.
Capital expenditure budget: this budget focuses on the big-investment for long-term period
such as purchasing big assets which includes new plant, land, building etc (Schaltegger and
Burritt, 2017). N&C limited needs to monitor and determine these budgets as these expenses
required heavy investment by company.
The advantage of financial budgets are as follows:
 it assist in controlling the revenue and expenses off the business operations.
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 It assist in showing the financial performance of the company to the management.
 Financial budget helps in the preparation of the final accounts of the company.
Disadvantage of financial budget:
 It is not possible to see the future unforeseen circumstances that can affect the budgets.
As the budgeting process is based on the estimation of future transaction, the financial
budget is not much affective (Bobryshev and et.al., 2015).
 The financial budget does not provide the flexibility, as once prepared the numeric terms
can not be changed.
The use of planning tool and their application for preparing and forecasting budgets:
Cash budget as planning tool:
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5. Different management accounting techniques used by companies in order to respond to the
financial problems and leads to sustainable success.
Management accounting techniques are very efficient in order to enhance the business
operations efficiency of N&C limited and in managing the financial stability in the organisation.
Management accounting techniques plays a crucial role order to help the management in
managing their financial instability and meeting the financial crises (Quattrone, 2016). N&S
limited is facing financial crises due to not achieving the performance level of business
operations. The management should adopt various techniques which will assist in responding to
this financial problem and will leads the organisation to long-term success. The company has
adopted the following techniques to respond its financial problem:
Balance Scorecard: It is an effective performance measurement tool which is used as a
strategic management in order to identify and effectively improve various activities of the
business operations. It is an effective tool which assist in measuring the performance level of the
organisation with a specific time period. This tool will assist the management in getting feedback
of their performance level. Balance score card is a data collecting process that helps in providing
quantitative results to the management in order to take effective decision to enhance performance
of various functional areas of organisation. It will as the organisation to increase their
productivity and helps in increasing their financial performance. With greater productivity N&C
limited could lead their organisation to achieve the long-term goals of success.
Key Performance Indicator: It is measurable value which demonstrate the manager the
efficiency of the company in achieving its business objectives. N&C limited has adopted KPI in
order to evaluate the efficiency of different department in reaching to the target set by top
management. KPI provides a matrix that helps the manager to make effective strategies in order
to enhance the companies performance level in achieving the set goals. KPI serves as an essential
tool for N&C limited which assist the management to compare its financial performance with
other company's performance (key performance indicators (KPIs) , 2019). Through comparing
the financial performance, management can effectively analyse the areas for improvement. The
financial matrix of KPI assist in analysing the gross profit and net profit which helps the
manager to make strategies in order to enhances the proper return of operations. KPI is crucial
for company in order to meet its financial problems and enhances the overall performance of
business operations.
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On the other hand, Nisa Ltd a manufacturing retailed company based in UK is also facing
financial crises. The company has to dealt with the problem in record of the financial data which
leads to fraudulent activities. It leads to effecting the financial performance of the company. Nisa
Ltd has adopted the following management accounting techniques in order to respond to its
financial problem.
Financial governance: it is one of the most important managerial accounting techniques
which assist the management in controlling, managing and collecting the financial transaction
and data of the company. It assist the manager of Nisa Ltd in tracking and recording effectively
and controls the process of disclosure of the financial information (Laudon and Laudon, 2016).
With accurately recording and presenting the financial information, it assist the management in
making correct strategies and decisions for enhancing financial performance. With effective
financial position, Nisa limited can efficiently achieve its long-term goals of sustainable success.
CONCLUSION
By summarizing the above report, it can be analysed that management accounting is very
crucial for the effective business operations and success of the overall organisation. Management
accounting is the presentation of the company's operational information to the management
which assist them in making strategies to enhance the performance and productivity. The present
report has concluded various aspects of MS of N&C building product limited. It can be analysed
from the report that management systems plays an integral role in enhancing the operational
efficiency of company. Different managerial reports has been analysed with their importance in
the organisation. A presentation has been included in the report on calculation of income
statement from absorption and marginal costing method. The report has analysed different
planing tool and its application in planning and forecasting. Further, report has analysed different
managerial techniques which assist in responding to the financial problems.
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REFERENCES
Books and Journals
Bobryshev, A. N. and et.al., 2015. Management accounting in Russia: problems of theoretical
study and practical application in the economic crisis. Journal of Advanced Research in
Law and Economics. 6(3 (13)). p.511.
Booth, P., 2018. Management control in a voluntary organization: accounting and accountants
in organizational context. Routledge.
Christensen, J., 2018. Accounting in 2036: A Learned Profession: Part II: A Learned Research
and Education Environment. The Accounting Review. 93(6). pp.387-390.
Holopainen, R. M., Niskanen, M. and Rissanen, S., 2019. Management Accounting and
Profitability in Private Healthcare SMEs. International Journal of Public and Private
Perspectives on Healthcare, Culture, and the Environment (IJPPPHCE). 3(1). pp.28-44.
Hwang, Y., Lin, H. and Shin, D., 2018. Knowledge system commitment and knowledge sharing
intention: The role of personal information management motivation. International Journal
of Information Management. 39. pp.220-227.
Kenichi, S. and Bruce, G. eds., 2018. Fixed Revenue Accounting: A New Management
Accounting Framework (Vol. 15). World Scientific.
Laudon, K. C. and Laudon, J. P., 2016. Management information system. Pearson Education
India.
Malina, M. A. ed., 2018. Advances in management accounting. Emerald Publishing Limited.
Maskell, B. H., Baggaley, B. and Grasso, L., 2016. Practical lean accounting: a proven system
for measuring and managing the lean enterprise. Productivity Press.
Monden, Y., 2018. Toyota management system: Linking the seven key functional areas.
Routledge.
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